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The FCA has published a report after an investigation which started in April 2017, and said it is cracking down on the way lenders are choosing to reward car retailers and other credit brokers.

The regulator said it will look at strengthening existing rules or banning certain types of commission models or limiting broker discretion.

The FCA say it is cracking down on expensive finance deals (Image: Getty Images)

In the meantime, it will deal with individual firms where problems were identified, but it expects all lenders and brokers to review the way they do business to make sure they comply with the law and treat customers fairly.

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Jonathan Davidson, at the FCA said: "We found that some motor dealers are overcharging unsuspecting customers over a thousand pounds in interest charges in order to obtain bigger commission payouts for themselves.

"We estimate this could be costing consumers £300m annually. This is unacceptable and we will act to address harm caused by this business model.

"We also have concerns that firms may be failing to meet their existing obligations in relation to pre-contract disclosure and explanations, and affordability assessments.